In the securitization process, A. security investors make loans to banks, who in turn make loans to households. B. banks grant loans to households and bundle the loans into securities that are then sold to investors. C. banks make loans to households, and then collect payments from the government to cover these loans. D. government bonds are used as a source of funds to make loans to households.

Question

Business

Alexia Beltran

16 November, 04:22

In the securitization process, A. security investors make loans to banks, who in turn make loans to households. B. banks grant loans to households and bundle the loans into securities that are then sold to investors. C. banks make loans to households, and then collect payments from the government to cover these loans. D. government bonds are used as a source of funds to make loans to households.

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Answers (1)

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Ann Simpson · Answer 1

Option "B" is the correct answer to the following question.

Explanation:

Under securitization, financial assets are collected through various means, the assets collected are sold as securities to investors or parties at a fixed interest rate. The process of converting loans into securities by banks is called securitization.

In the process of lending to homes, banks coverts the loans to securities and sell them to investors.